Financial Regulator to Review AI Impact on Consumer Finance

The UK financial regulator, the Financial Conduct Authority (FCA) has started a review into the implications of using advanced artificial intelligence (AI) on consumers and the ‘retail’ financial services market.  The closing date for submissions is 26 February, giving respondents less than a month to offer input.

AI is growing as we already know and you may not even know when you have interacted with it.  Even the spellchecker in your email is a very simple version of AI.  If you are social media, we guarantee you will have already seen and been fooled by AI generated pictures and even video clips.

Mortgage searches, financial questionnaires and even ourselves are involved, developing our own financial advisory ‘signposting’ engine that when combined with AI, will become your virtual or ‘robo’ financial adviser. 

The FCA is concerned that rapid advances in generative, agentic and emerging forms of AI will mean the next phases of change could be profound, with the power to reshape markets, change the way firms compete and how consumers use retail financial services.

Head of the review, Sheldon Mills said: “AI is already shaping financial services, but its longer-term effects may be more far-reaching. This review will consider how emerging uses of AI could influence consumers, markets and firms, looking towards 2030 and beyond.”

The FCA is seeking views on 4 correlated areas:

1. How AI could evolve in the future.
2. How these developments could affect markets and firms, including changes to competition and market structure and UK competitiveness.
3. The impact on consumers, including how consumers will be influenced by AI but also influence financial markets through new expectations.
4. How financial regulators may need to evolve to continue ensuring that retail financial markets work well.

Comment

We suggest AI is not just about how it changes markets and its interaction with and changes to consumer behaviour but we suggest there are questions of:  Liability

• Who to blame when it goes wrong completely with the wrong product or service.
• Who to blame if unscrupulous firms weight outcomes to their benefit that leads to consumer detriments.
• Who to blame and who pays if fraudsters use AI to steal your wealth.